Stock Market Outlook for February 26, 2025
Perhaps it is not too much of a surprise that the equity market is weakening as the yield curve emerges from inversion.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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Entergy Corp Hldg Co. (NYSE:ETR) Seasonal Chart
Nu Skin Enterprises, Inc. (NYSE:NUS) Seasonal Chart
Ardmore Shipping Corp. (NYSE:ASC) Seasonal Chart
Willis Towers Watson Public Ltd. Co. (NASD:WTW) Seasonal Chart
The Markets
Stocks continued to struggle through the Tuesday session as waning risk sentiment and negative seasonality for the back half of February had investors pushing the sell button. The S&P 500 Index closed lower by nearly half of one percent, pushing further below support at the 50-day moving average (6006), reflecting the apparent loss of excitement to buy around present heights. The benchmark is back below the 6100 hurdle that acted as a cap to upside momentum over the past couple of months. Momentum indicators have negatively diverged from price since the middle of last year, highlighting the waning enthusiasm investors had been expressing towards tech-heavy (Mag-7) benchmarks, like this, amidst extreme valuations. Downside risks on a pullback over the near-term are back to the July/August 2024 highs around 5700, a move that would amount to a 7% pullback from recent heights. This would be a healthy and ordinary correction within a bull market, by any measure. We continue to monitor the potential impact of the apparent rotation in the market on our list of candidates in the market to Accumulate and to Avoid and we have adopted more of a neutral stance as segments that were previously noted as Accumulate candidates fall off (eg. Technology) and as areas to Avoid are added.
Today, in our Market Outlook to subscribers, we discuss the following:
- Stocks have fallen since the yield curve emerged from inversion in December
- The decline in treasury yields is rather abnormal for the start of this post election year
- The downfall of cryptocurrency prices and the downside risk for Bitcoin
- US Home Prices; which cities in the US are strengthening and which areas are struggling
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Sentiment on Tuesday, as gauged by the put-call ratio, ended close to neutral at 0.94.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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